On the Fed, the Journal’s Readers Deserve Better

The snarky aside is a common tool substituting for a sound argument. Sadly, a Wall Street Journal editorial today gave in to the temptation.

The subject was the announcement by the Federal Reserve that it would maintain its basic, highly accommodative monetary policy stance for “an extended period”. The Fed also announced it would suspend its special program to buy Treasury debt in an effort to create downward pressure on long-term interest rates.

There is a lot of debate in economic and financial circles as to whether the Fed has, again, gone too far in pumping liquidity into credit markets and whether Fed Chairman Bernanke’s so-called exit strategy reversing its extraordinary actions in recent months can or will work. These are reasonable questions, and a reasoned answer from the Journal would be welcome.

Instead, the Journal suggests that Bernanke won’t take the necessary steps to pull back yet because he “isn’t about to tighten money while he’s still auditioning for re-appointment to a second four-year term as Chairman”.

There are plenty of examples in Washington and in the press of crass opportunism. And Chairman Bernanke has given no suggestion that he does not want re-appointment. But suggesting that his judgment about the correct policy is tainted by the prospect of re-appointment is unwarranted. Simply put, it is inconceivable that Bernanke would risk his reputation, and the economy, to pad his already sizable odds of keeping the job. To suggest otherwise is to substitute an ad hominem aside for argument. It makes the Journal editorial sound like a snarky blog.

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JD Foster is the Norman B. Ture Senior Fellow in the Economics of Fiscal Policy at The Heritage Foundation. His primary focus is studying long-term changes in tax policy to ensure a strong economy. He also examines changes in Medicare, Medicaid and Social Security so they are both affordable and more effective.

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